- 1 -

Conference Call Transcription Report On Q1FY09 performance of

Orchid Chemicals and

Pharmaceuticals Limited

Management Team: Mr. Raghavendra Rao, Managing Director

Mr. S. Krishnan, CFO, Mr. Ganesh Balakrishnan, DGM Corporate Planning

and Mr. Ch. Ram, Head Corporate Communication and Investor Relations.

Hosted by: Surya Narayan Patra

- 2 -

Operator: Thank you for standing by and welcome to Q1, FY 2009 Financial Performance of Orchid Chemical and Pharmaceutical Limited Conference Call, presented by Mr. Surya Narayan Patra from Reliance Money. At this time, all participants are in a listen-only mode. There will be a presentation followed by a question-and-answer session. At which time if you wish to ask a question please press "star" "one" on your telephone. I would like to hand the conference over to your speaker now, over to you, sir. Surya Narayan Patra: Thank you, Sachin. Good afternoon to all the participants. I am Surya Narayan Patra on behalf of Reliance Money. Welcome you all to the Q1, FY '09 earnings call of Orchid chemicals and Pharmaceuticals Limited. During the quarter the company has reported better revenue growth of 22% despite no launch of new product in regulatory markets and maintained their core operating performance. But because of the FCCB led notional notes, the bottom line got dampened. To discuss the detailed financial performance of the company we have with us today, Mr. Raghavendra Rao, Managing Director of the Company, Mr. S. Krishnan, CFO, Mr. Ganesh Balakrishnan, DGM Corporate Planning and Mr. C. H. Ram, Head Corporate Communication and Investor Relations. Now I request, Mr. Rao to precede the call and take us through numbers and brief us, over the future outlook of the company, over to you, sir. Raghavendra Rao: Yeah. Thank you and very good afternoon ladies and gentleman, who have been on the call. As introduce or mentioned, we had presentably good quarter in terms of sales. But a couple of things have reduced the profitability at the net profit level. Firstly, no new approvals or new launches have taken place in this quarter. If that had that happened it would have increase the quality of the top line and also the profitability. The second thing was that the translation of foreign currency convertible bonds in rupee has to go through the P&L account as all of you are aware. and the rupee was at Rs 40.21 in 31st, March, whereas it was Rs 43.13 on 30th, June, implying 8% rupee depreciation. when you express it on the total outstanding of the foreign currency loan of $193 million that would come to about 58 crores, which is reflected as the exceptional item here and so excluding that the operational performance has been on the lines. We expect of at least further things to happen, we could clock in around 300 crores of top line and including consolidated situation of 328 crores. We could get an EBITDA margin of approximately 28.5%, which continues to be in the higher bracket of the industry with one or two company's exception. And this is because of our presence in the regulated market, which continues to be very robust, especially the US market.

- 3 -

The breakup of this 300 crores top line as 40% roughly is in bulk and 60% is in formulations and out of the 60% formulation of 180 crores and around 70% has come from the US market, which is contributed by five product groups led by Cefepime, which we did around $10 million. There are $5 million groups which are of five, one is Cefazolin other is Cefdinir and then third is Cefoxitin and fourth is Ceftriaxone and others are smaller products like Cephalexin and granisetron are the product put together. So we continue to maintain the run-rate of $30 million of sales in the US market per quarter, which is in access of the about $120 million on an annual basis. The EBITDA level 28.5% is also quiet satisfactory for the company and the material cost and other consumption continues to be under control its about 30% of sales compare to the full year of about 34% of last year. So there have been some product mix changes and cost improvement that have benefited the company. Of course, the other cost have gone up a little bit in line with international situation say for example, the cost of electricity has gone up, cost of steel generation has gone up and the attendant other invert cost have gone up due to the oil price increases. and staff cost has gone up because we have added for the new blocks of non-antibiotics as well as the Piperacillin and Tazobactam and other factories we have added the people also in R&D. The depreciation and interest also have gone up because they have commission all the manufacturing facilities from which we have done the filing for Piperacillin as well as NPNC products. So interest and depreciation figure also have gone up, but out of the net operating profit of 88 crores of EBITDA we come to ending before interest charges of 57 crores which is also about 30% higher than the corresponding period last time which have a net profit is around 27 crores from the operations, but that turn into 31 crore negative because of the SEC because until it is converted or it is repaid we have to keep showing the different in rupee terms vis-à-vis dollar terms at the end of each quarter. So if rupee doesn't move much from the present level maybe the impact will be marginal. As we go forward but if there are violent duration then obviously that has to be exceptionally reflect that. So if you look at the last year also the full year operational performance was about 120 crores or so at the net profit and the exceptional item was also at the net of tax level around 50 -55 crore. If you keep the exceptional item separately, I think we are on track and we will only continue to do better with expected approvals of Tazobactam, especially for Europe and US in the next few weeks and also certain new products in European markets mainly on the cephalosporin side. So all in all I think this was the satisfactory quarter could have been better if we had more approval but at the same time we are quite hopeful that the next few quarters are going to be working out quite well for Orchid. and on the regulatory front we have made a few more filing as the total filing

- 4 -

count have gone 50 in America and about 20 in Western Europe. So we have 70 filings that dosage form level, of course all of that is supported by our own drug master size. On the product approvals in other market which is other then US we have being able to get couple of approval of tazobactam, Piperacillin both in Canada and Australia and we are just launching the product next week. And we expect that European and American approvals will follow through it and that will be a big growth driver for this year for the company. So that is what I have to say as far as product situation is concern. And now if any questions clarifications, if there we will be happy to provide the same.

- 5 -

Question and Answer Session: Operator: Certainly, sir. Participants, who wish to ask a question, please press “star” “one” on your telephone keypad and wait for your name to be announced. The first question comes from Mr. Sujit Pal from Standard Chartered Account. Please go ahead sir. Sujit Pal: Mr. Rao, could you give me breakup of your sales in Cefoxitin, Cefdinir, Ceftriaxone and Cefepime? Raghavendra Rao: I thought, I briefly mentioned it. Sujit Pal: Did you say Cefeprime is $10 million. Raghavendra Rao: Yeah. Other products are 5 million each, 5.6 million in surface volume and 5 million Cefdinir, 4.5 million Cefoxitin and it 3 million Ceftriaxone and all other smaller products like cefoxitin and other things put together 2 million. total is 30.8 million. Sujit Pal: 30.8 million. Okay. And I have also observed your inventory built up, the first thing which I see, is the delay we use difference between the standard in inventory level and consolidated inventory level. And also receiving the last year, you remained also has been built up. So you see, basically kind of indications that the major product you are going to launch in regulatory market or what was the main reason between standard and consolidated inventory level? Raghavendra Rao: My CFO will tell me the differences by standard loan consolidated if there, why is a difference. I will come to the total build part of it, while I give you the full answer. For the full year, as a whole the judgmental difference was roughly about 19 crores, which is very small numbers for the whole year compared to the size of the company which is in 2300 crores sales we have done. So March '08 numbers compared to March '07 the difference was only 19 crores and that is also the movement in inerrability raw material are got in this movement actually. Sujit Pal: Growth rate of finish goods.

- 6 -

Raghavendra Rao: Yeah. This movement is only in finished goods movement which is a 19 crores figure. As far as the built-up of additional stock is concern this is the recently the tazobactam and Piperacillin, which we have been expecting approval this is a main item, which we are expecting to liquidate definitely in this quarter, once the approval come in. Our CFO Krishnan will tell you the difference between consolidated and standalone. Krishnan? S. Krishnan: Yeah. You see -- they are joint venture where there is reduction in the overall inventory. That is why there is difference between consolidated and standalone. Sujit Pal: Mr. Rao there is thing which we have observed also in your interest level. I think its pretty high 81% year-on-year growth. If I take your based business EBITDA which comes around 25% and year-on-year growth of your profit, before interestThere I have observed that 10% de-growth in your profit, if I remove your other income part. And if I take just after interest, that means PBT excluding other income and exceptional items. I have found as a 10% de-growth. So could you throw some light on that? Raghavendra Rao: Well, you see percentages are sometimes misleading; actually you should go by previous quarter, kindly preceding quarter interest charges. They have been setting at the rate of around 24 to 25 crore per quarter has gone up to 30 crores I agree, that is because we have commissioned all the project that matters including you know carbapenem plant as well as tazobactam plant and the non-antibiotic plants also. So all plant are commissioned so this will be the run rate and because until the plants are coming to be as we know the amount spent on it is a lot to be capitalized until the plants are actually commissioned. The first commissioning even though we are not getting the revenues out of it as we see. But once we just start getting the revenue from the approvals coming is this, the top line and the profit line where we grow whereas interest line and depreciation line remain constant as you know because these are already been put into a commercial used technically but without any corresponding benefit so to say. what is coming is one upon of the commissioning of the new plants. And so we don't expect this run-rate to go up beyond the 30 crores now, because all the plants are commissioned and operational. And secondly even though technical classification is other income, this is all commercial in nature. What has happened is that certain procurement economics as well certain discount and other things, we said we would give and we will receive, which are of commercial nature, have been -- as it didn't matter abundant caution have been provided for in the last quarter of last.

- 7 -

But actually those moneys have come in and we have realized the commercial benefits out of the provisioning that we made. So this is an operating income only, but technically finance stable are classified little bit in this space. So we have to take that 88 crore or the 57 crore figure as such and that triples on at EBIT level. Actually, an increase corresponding quarter and I would even temper the argument by not saying so much of a increase in the correspondent quarter because corresponding quarter did not have certain things like fulfilled long jump as we're saying or increase in the share 15 years. Somebody was not even long set this in last year and all that. So if you take the average of the last full year. We are pretty much in line with that. So I would not say that we have greatly on a performance but certainly there is no big decrease in the performance level at the operating level this is what I have to say. Sujit Pal: What's your breakup in other income level? Raghavendra Rao: It is almost entire amount is commercial in nature that is discount provided per procurement and long sale. since the moneys have not received we had provided for in the last year P&L, as the money has come back, so 18.33 crores is the amount and it included in net in point, balance 30 lakh is the small other income of some disposal level. Sujit Pal: Don't you have any DEPB? Raghavendra Rao: What is that? Sujit Pal: Don't you have any export benefit? Raghavendra Rao: No. We don't have any export benefit because we are not into to duty drawback or cash compensate which is of our scheme. We are only operating under section 10B. So only the tax benefit is there on export. That too on graded basis. It is under section 10B until next year. Sujit Pal: Okay. And you don't have any Forex gain out of your realized one? Raghavendra Rao: No. We have no Foreign exchange gains. There are lots of which are under than the FCCB matter which is mentioned here. Sujit Pal: Okay. And okay. I'll come back again.

- 8 -

Raghavendra Rao: I mean ERF will be very marginal. I mean some small contract here and there will be there, but nothing significant. About 58 lakhs are supposed to include in other expenditure classification of diligent. Sujit Pal: Could you tell me out of your total loan which is at presently at what level? And second thing is that out of your total loan, how much belongs to Forex loan? Raghavendra Rao: $193 million is the foreign currency convertible loan. Two bonds we have, 175 million maturing in 2012 and 18 million maturing in 2010. Sujit Pal: Right. What's the… Raghavendra Rao: To say on that 8% depreciation of rupees apply on 193, you will come to 58 crores. I don't why you consider this 58 crore being a different figure from the foreign currency convertible loan figure. It is nothing but FCCB multiplied by the rate difference in exchange rate of rupee to dollar between 31st March and 30th June. 40.21 versus 43.13 is an 8% depreciation, 8% on $193 million multiplied by 43 rupees will give you 58 crores. Sujit Pal: What's your total debt presently? Raghavendra Rao: Total loan amount other than FCCB, we have long-term loan for 500 crore and working capital of around 420 crore this excludes to be discounting which is a running account of -- I mean the bills that customer paid to the bank. That is about 250 crore. Sujit Pal: That is about 250… Raghavendra Rao: So the unsecured loans are also that which are up to 200 crores. So the cash component of the loan amount is 1120 crore. Sujit Pal: And of this total amount, how much belongs to Forex? Raghavendra Rao: $50 million, 50.

- 9 -

Sujit Pal: $50 million. Raghavendra Rao: 200 crores is foreign currency loan. 900 crores is rupee loan which excludes the FCCB. This is the position. Sujit Pal: Have you added something in to this? … Raghavendra Rao: And the exceptional item reflects only the foreign currency percent on the rupee depreciation. Sujit Pal: And how many days presently of your data? Raghavendra Rao: Data is about 5 months. Sujit Pal: 5 months. Raghavendra Rao: Yeah. Sujit Pal: Okay. I'll come back, again. Thanks. Raghavendra Rao: Thank you. Operator: Thank you, sir. The next question comes from Mr. Vishal from Centrum Broking. Please go ahead, sir. Vishal: Yeah, sir. My question was with regard to -- can you once again repeat what is the breakup of these 30.8 million sales -- $30.8 million sales we had in the US, $10 million first around? Raghavendra Rao: Cefepime. Vishal: Pardon?

- 10 -

Raghavendra Rao: Cefepime. Vishal: Okay, cefepime. And the balance 5 million you said from the other products like? Raghavendra Rao: Yeah. 5.6 million is Cefazolin. Vishal: Cefazolin. Raghavendra Rao: And 5 million is Cefdinir. Vishal: Pardon? Raghavendra Rao: Cefdinir. And 5 million is Cefoxitin. Vishal: Cefoxitine, okay. Raghavendra Rao: And then 3 million is Ceftriaxone. Vishal: Raghavendra Rao: 3 million is Ceftriaxone. And then 2, 3 million is miscellaneous product like cephalexin, cefadroxil and small products. Vishal: Okay. Raghavendra Rao: Adding to 30.8 million. Vishal: Okay, adding 30.8 million. And with regard to the unsecured loan of 200 crores that you mentioned at the break off 1123 crores, is it dominated in foreign currency? Raghavendra Rao: No, rupee loans. Unsecured foreign currency is only the FCCB.

- 11 -

Vishal: Okay. That's it. So this 200 crore unsecured loan is denominated in rupee terms? Raghavendra Rao: Yeah. Out of 11, 20 crores, 900 crores are rupee loan. 200 ton crores are so of the foreign currency loan. Vishal: I couldn't get you. You said, long-term loan is 500 crore, working capital is 420, so that comes to 920. Raghavendra Rao: Yeah. Plus unsecured is 110 to 200. Total is 1120. Vishal: Yeah. Raghavendra Rao: So that 50 million of long-term loan, $50 million which is with rupees wise 210 crore is denominated in foreign currency. Vishal: Okay. Raghavendra Rao: So now we want a further breakup. Long-term rupee is 290 crores. Long-term foreign currency is 210 crores. For short-term which is normally rupees, sometimes we take the foreign currency in packing credit that the combination is 420 crore. That interest rate is not much different. That's why I am not giving the breakup and 200 crores is something good, it is only rupee loan. Vishal: "Accha". And long-term loan 500 crores out of which 290 is? Raghavendra Rao: Rupee denominator, 210 is dollar denominator which is $50 million. Vishal: Okay. And the rest of working capital 420 and unsecured 200 is denominated in rupees? Raghavendra Rao: Right. Vishal: Okay. So either no internally you need that this 210 crore US dollar should be again club mark-to-market?

- 12 -

Raghavendra Rao: That has been done. Vishal: Okay. But you said that, that has been done only with regard to the FCCB? Raghavendra Rao: Yeah. Mainly for the FCCB because there is also a dollar payable, which will be there in current liabilities also. There are some dollar receivable will be there. So -- other than the foreign currency, the net of what we pay and what we need to get more on that balance is out. That is why the 58 crores reflects an impact of $193 million on the rupee exchange rate different. Vishal: Okay. And this 19.3 million FCCB, when is the majority you give the figure 2010? Raghavendra Rao: It's 193 million not 19.3 million. Vishal: 19.3 crores. Sir, 193 million, where is the majority? Raghavendra Rao: 175 million is February, 2012. Vishal: 2012. 173? Raghavendra Rao: 175. 18 is October, 2010. Vishal: Okay. October 2010. Okay. Thank you. Raghavendra Rao: 18 million. Yeah. Jannie Baug: Okay, sir. Could you please tell us the loan amount that you mentioned, is there a separate short term loan amount? Raghavendra Rao: Yeah. We have short-term of about half of it's a short term. 11 -- out of 1120 crores, 500 is long-term, 620 is short-term.

- 13 -

Jannie Baug: Okay. And would you be able to give the same breakdown for the fiscal year and the March numbers, March date? Raghavendra Rao: Yeah. It is more or less the same, because, between March and June, the very marginal difference of around 10 crore is there. So it is neither here nor there. So 1120 breakup what we gave you is more or less as of March '08 only. Jannie Baug: Okay. And what's your Capex for the quarter and also for the fourth quarter last year? Raghavendra Rao: For the quarter last year, for the quarters it maybe about $20 million for the quarter. Jannie Baug: For the fourth quarter last year? Raghavendra Rao: Yeah. Jannie Baug: How about this quarter? Raghavendra Rao: This quarter is about 5 million. Jannie Baug: US? Raghavendra Rao: Yes. Jannie Baug: Okay. And would you be able to give some guidance for the fiscal year '09 including some other launch that you mentioned Tazobactam and also some catalyst point, product at EU. And if you expect any contribution from NPNC and also some sort of the top-line or major line guidance for the year? Raghavendra Rao: Yeah. I think we should be able to do around 15 to 20% growth for the year. And driven by of course Tazobactam and Piperacillin when it happens, we expected that to happen shortly in the next few weeks both in US and Europe. Also, we are looking at launches like Cefuroxime and Cefpodoxime product in the US market. As well as in EU, we are expecting Ceftriaxone and Cefazolin to be launched in the EU market shortly. On top of it, we are looking at about five non-

- 14 -

antibiotics which we have already filed applications in the past. Like products like (inaudible) and other products. So combinations of these, we are looking at between 8 and 10 products to be launch but the major out of that is Tazobactam and Piperacillin followed by a few Cephalexin in the EU market. If these things happened as we've expected them to happen, I can see about 20% growth in the business as a whole for the company on a fully year basis. So because these new products addition, we'll actually give a little bit higher growth but we have to temper the growth by the way of reduction in the existing molecules because competitions would definitely come in, like it has already come in anytime with one more player launching the product. It is expected in other products as well. So on a combination of both the new launches and the tapering down of the previous launch product -- I mean previously launched product. I expect around to 20% growth for the year. Jannie Baug: A 20% of earnings or revenues? Raghavendra Rao: 20% of revenues and it also should go somewhat similar percentage. Jannie Baug: Okay. And do you have any major Capex or do you have any Capex guidance for the year and also any plans for acquisition or new plans commissioning? Raghavendra Rao: Acquisitions definitely not because we are quite stretched as the balance sheet we are not planning any acquisitions at the moment. I think for this four product growth capital expenditure is quite a bit lower, not exceeding the depreciation amount about 25 to $30 million will be the total Capex for the whole year. That is to keep the certain balancing equipment in some areas where we have more orders than what we can handle and certain maintenance and routine Capex. So CapeEx will be not exceeding the depreciation amount, which is about 30 million, 25 to $30 million. And then revenue and the profit estimates are 15 to 20% higher than '08 is what we can may -- might that's one of the product launches. Jannie Baug: Okay. So, do you have any funding plans for the rest of the year? Raghavendra Rao: Nothing complete at the moment. There are no funding plans whatever the free cash flows post maintenance and capital expenditure we will try to dry down some debt. But it will take sometime, because right now on these assets are all in place and the benefits are going to accrue. So in the next two, three years, we will use the free cash flow to bet on debt. In the immediate future we are not having any funding plan of any major nature. Jannie Baug: Okay. Thank you. Lastly, could you please give us the balance on a consolidated basis for your inventory receivables and payables please?

- 15 -

Raghavendra Rao: Yeah. It is 600 crores is the inventory, a 630 crores is the inventory and debtors are the 520 crore and 380 crores are payable. Jannie Baug: 630 crores for inventory, 520 in for debtors and 380 for payables. Raghavendra Rao: That's right. Operator: Thank you. The next question comes from Mr. Awadhesh Garg from Kotak Security. Please go ahead, sir. Awadhesh Garg: Just a small clarification, there -- this pertains to Q1 about '08. Last year in Q1 '08 like as you reported interest cost -- 167 million and you have restated as a 204 million in this quarters results. If you can throw some light on it? Why it happened? Raghavendra Rao: I don't know which number you are referring too. Can you come again? Awadhesh Garg: See, if you see interest cost, sorry, just relative interest cost. And if you see interest cost in Q1 about, in today's results is 204 million. But in the last year in this Q1 FY '08 this was 167 million, so why this, so huge statement has happened? Raghavendra Rao: Our CFO will answer this question. S. Krishnan: No, this is actually was correct, as given in the second quarter of last year in terms of the publishing the newspapers actually there was a regrouping done. Awadhesh Garg: Okay. S. Krishnan: In the interest cost, like if you look at the Q2 results of '08 this would have got corrected. Awadhesh Garg: Okay. S. Krishnan: So the interest for the first quarter was around 20 crores.

- 16 -

Awadhesh Garg: Right. S. Krishnan: That is a correct number. Awadhesh Garg: Okay. Fine. Thank you. Operator: Thank you. The next question comes from Mr. Prashant Nair from Citi Group. Please go ahead. Prashant Nair: Yeah. Sir, what gives you the confident that Tazo-Pip in the US will happen in the next few weeks. I mean, if being quite a while and have the US, FDA comeback to you on the citizen's petition or is there anything that gives you confident that this will now happen over the next few weeks? Raghavendra Rao: Yes. In fact thank you, Prashant for asking this and there are two effects to this. One is all the subsections of this audit have been fully completed and price are being signed out. So this is the information we have both on the plant visit and approval of chemistry and microbiology and labeling. And what gives me the confidence is that very recently about four weeks ago, between three and four weeks ago, FDA asked us specifically and set in more information to prove that our product is comparable to the new dosing that has launched, I mean, new product that they have launched. We immediately conducted those in-vitro studies and submitted the data. At that time, we had conference call and discussion with the FDA people of all the division that is office of general council as well as the office of generic drug plus the office of new drug which was council to write new patent. Then to their satisfaction, we have submitted all the information. We got that acknowledgment last week that they have gone through that information and they are quite satisfied, it is what they told us. And then we presume now that based on that feedback and traditional information that they have asked and taken and we have satisfactorily given to them. We believe that no more queries are possible in this. So we expect the approval to come through in the next three four weeks. Prashant: Okay. Raghavendra Rao: That is on the US side. Prashant: Right.

- 17 -

Raghavendra Rao: On European side, again all the paper work is fully in place. We just got a confirmation that it’s just going to be a matter of less than a week, I would say that our e-approval should come in and they should be launching it as soon as approval come, they should be launching it in August itself. Prashant: Okay. Now in your 15 to 20% sales guidance, if one were to ignore Tazo Pip, what would that number be? Raghavendra Rao: That’s again a good question. And that number would be flat. Prashant: Okay. So most of the growth will come if the launch happens? Raghavendra Rao: Correct. Prashant: The other question related to your other income, you know, its -- as you mentioned its operating, now this 18 crore figure how sustainable is it across quarter? Raghavendra Rao: No. it is just a one off thing. Prashant: Okay. So on a normalize basis, on a recurring basis you won’t have any other income of this sort in the next few quarters? Raghavendra Rao: No. there will be no provision also, there will be no recoveries also because there is an evident cost in the last few quarters. Prashant: Right. Raghavendra Rao: And two three quarters earlier officially, we provided for something but actually we realize those money. So the auditors have classified it in this way. But otherwise there are not going to be any extraordinary debits or credit as we go forward from now. Prashant: Okay. Have you taken any debits in this quarter for similar provision, you know, once you made last year?

- 18 -

Raghavendra Rao: No. Operator: Thank you. The next question comes from [Ankit Thakkar] from Standard Chartered. Please go ahead. Ankit Thakkar: Yeah. Thank you for taking my question. what was the R&D expenditure for the quarter? Raghavendra Rao: It is 12 crore, 11.8 crore. Ankit Thakkar: 11.8 crores and for the full year what would be the expectation? Raghavendra Rao: Same run rate about $10 million about 50 crores will be the full year. Operator: Thank you, sir. Next, question comes from Vishal from Centrum Broking. Please go ahead sir. Vishal: Yeah. Sir, once again the clarification on the other income was decent, some kind of discount was provided in the last quarter which was return back this quarter. So could you explain that thing? Raghavendra Rao: Yeah. We had to receive certain things from our procurement economy which we thought if it doesn’t come, we should not take it as a credit in our books. So we provided for it that as if it does it, it won’t come but actually it has come so we have taken the credit for it now. Vishal: Okay. There is entire amount of 18.33 crore that is attributable to those provisions only? Raghavendra Rao: Correct. Operator: Thank you, sir. Once again, participant who wish to ask a question, please press “star” “one” on your telephone and wait for your name to be announced. The next question comes from Mr. Prashant Nair from Citi Group. Please go ahead sir. Prashant Nair: Yeah, sir. Beyond fiscal ‘09 which are key product opportunities that one should track when one looks at your revenue expectation?

- 19 -

Raghavendra Rao: I think it’s mainly Carbapenems per year beyond fiscal ‘09 and followed by a few Paragraph IV first-to-file. In Paragraph IV first-to-file, some of the key products which we can talk about are Ibandronic acid, we can talk about Memantine and we can also talk about the Gemifloxacin where we believe that we are the -- only Paragraph IV first-to-file company and for nine time, I would say that European launches basically of more cephalosporin and American launching in EU and also Imipenem in the US followed by certain penicillin injectables also in the US market like [ampicilbactam] where as in 2010, ‘11 there is a big list of about 30 products. But the main thing is that I mentioned the Paragraph IV first-to-file in terms of two, three products that they talked about and Carbapenems in the rest of the world including US. Prashant Nair: Which was a first Para IV you mentioned -- some acid I didn’t get the first one? Raghavendra Rao: That is Ibandronate acid, Ibandronic acid. Raghavendra Rao: The last product had four particular lines Prashant Nair: Okay. In terms of other things was in terms of your strategic alliance with Ranbaxy, how have discussions on that progressed and when do you see any kind of structure emerging in terms of what you intend to do together? Raghavendra Rao: We have linked only one agreement with them, which is to supply bulk actives in cephalosporin, so 10 products we have taken up. And those 10 products we are supplying to them on to the regulatory framework is clear basically from their end, because you know, there is kind of a situation they’re in at the moment. And once the regulatory framework is clear, in the sense that our bulk going into their formulation and that getting approved for the change of source in the US -- with the US FDA then it happens, we will be supplying bulk to them from our facility. That is the agreement that we have with them. That should kick in the normal course, its regulatory approval for the things, they are able to get. Because from our side there is nothing else to do, because we have the approval, we have client so we can supply to them. But when they change it, they have to make, take this product to do, put it on stability their formulation and get it approved by the US FDA that instead of their own bulk they are using Orchid’s bulk. Once those approvals are in place which in normal course should take about six to nine months, but in this peculiar circumstance I don’t know how much time it will take from their point of view. If it happens as soon as it happens, we will be in a portion to supply. So the best case scenario would be in the last quarter of current fiscal. We can start from supply. The off case scenario can be anything, we don’t know. But reasonable scenario would be that 2009, ‘10 financial year would have some positive impact on our contract list as there would be one more customer as far as for our bulk with additional revenues and profits.

- 20 -

Prashant Nair: Is there any move to our target some of the non-US, non-EU markets with your products to them . Raghavendra Rao: Not at the moment, I mean it is -- a template exist but I don’t think specifics we are going to go through at this stage, because they have the options, we have the options. So I don’t think anything specific is happening on non-US, non-bulk side right now. Prashant Nair: Right. And in terms of US products, you know, anything further on safety offer or is that still at the back of the queue? Raghavendra Rao: It is actually the front of the queue, only thing is that we are not able to, you know, even in the front of the queue for us, we are not getting the ticket, because they haven’t open the counter at all, it is something like that. We know that we are one of the successful and heading the queue, but unfortunately there are so short stuff that we have absolutely no news on when it will be approved. Prashant Nair: Is Cefixime, a product provide opportunity for you at all and you are one of the few companies to have a DMF filing there? Raghavendra Rao: Correct. It is an opportunity for us and next year it should kick in. Operator: Thank you, sir. The next question comes from Mr. Surjit Pal from Standard Chartered. Please go ahead, sir. Surjit Pal: Mr. Rao who is your partner in distributing or setting your products in Australia for Tazo? Raghavendra Rao: It’s Hospira. Surjit Pal: Hospira again. And what is the revenue you have got from Canadian launch of Tazo? Raghavendra Rao: We are just launching it now, so we don’t have a perfect revenue number right now.

- 21 -

Surjit Pal: And what is the latest status of your Cefpodoxime Proxetil in France launch? Because already one Indian generic has already launched their product over there and already it was in 70 to $75 million product, I believe. So after that generic launch, do you still believe that there is a still enough juice is left for any other generic company to enter? Raghavendra Rao: Yeah. We are expecting lower approval in the next six months. So you will have a quarter for launch of the products in EU, especially France. Operator: Thank you, sir. The next question comes from Mr. Prashant Nair from Citigroup. Please go ahead, sir. Prashant Nair: Yeah. Sorry, I just missed this one earlier. When you said excluding Tazo revenue growth will be flat, did you exclude the approval that you have already got as well as in Australia and Canada as well? Raghavendra Rao: No, There we already have approval, why should I exclude. Prashant Nair: Okay. Now so only Tazo in US and Tazo in Europe is the one which you’ve excluded? Raghavendra Rao: Correct. Operator: Thank you, sir. Once again, participant who wish to ask a question, please press “star” “one” on your telephone keypad and wait for your name to be announced. The next question comes from [Kavita Kamath] from First Global. Please go ahead. Kavita Kamath: Yeah, thank you for taking my question. My question was regarding the raw material cost. Actually, you had just mentioned that the top line growth had been around 24% in spite of not having any significant launches, then why is that raw material cost as a percentage of sales, if you see, it’s gone up substantially? Raghavendra Rao: Actually, if you see you have to net off the decrease increase in stocking trade with material cost. You have to club both those numbers. If you do that for the first -- for the quarter that have been questioned now, that number comes to something like 87 crores. Kavita Kamath: Okay.

- 22 -

Raghavendra Rao: 87 crores on 288 crores if you take, it comes to 30% as a percentage. Similar access you do for the other one, you come to 61 crores, 92.88 minus 31.9, so 61 crore. 61 upon 236 will come to 26%, Kavita Kamath: Right, right. Raghavendra Rao: For percentage point wise that why it has gone up? Kavita Kamath: Yes. Raghavendra Rao: Actually, every quarter, improvements in terms of changes in the product mix and market mix will continue to be there. Say for example in the current quarter, we have a few products in market which were not at all existing in the corresponding quarter because it is one year which was one year back. And in one year lots of things are changed in pricing, costing as well as in product mix. So better would be to take the full year number, for example of March '08, 31st March '08. Raghavendra Rao: If you take that on a similar calculation if you do, it will be 409 crores on 1239 crores. That will come to actually 33%. So compare to that there will be a marginal increase here -- marginal betterment here about 30, 31% is the figure here now. So it depends with 2, 3% percentage points that’s the metal cost to sales, we will keep hearing from quarter-to-quarter as from the level of integration that we have in the product and the market launches that we have and the pricing that we obtained. For example, one year above percentage of the pricing was much better. Whereas, now the pricing is a little bit lower because one competitor has already come in. Raghavendra Rao: So obviously that percentage of metal cost to sale will come down because for the same product we are getting lesser revenue this time around compared to what we got last year around this time. Kavita Kamath: Once Tazobactam Piperacillin launch takes place, I mean we're going to see those sales coming through in the subsequent quarters. To what extend do you see that improving these raw material cost as a percentage of sales?

- 23 -

Raghavendra Rao: Maybe, you see, we have to see the total Tazobactam proportion in the total business of the company. And I have mentioned that 15 to 20% increase will come mainly to the Tazobactam. So that is a kind of a contribution about one-seventh of our total revenues were between one-sixth and one-seventh of our total revenue is what is going to come Tazobactam. Even though that would have a better margin percentage compared to this. Overall, for the business as a whole it means alternate by one to two percentage points and not more than that. Operator: Thank you. There is a follow-up question from Mr. Ankit Thakkar from Standard Chartered. Please go ahead, sir. Ankit Thakkar: Yeah. Thank you. Sir, Can I have a market size of Tazo Pip in Australia and Canada? Raghavendra Rao: Yeah. The sub-companies, so we expect significant market share there in Australia. We have a sub-company to launch and almost half of the market we should get. The market size is small tough but half of the market we should get because apart from [Innovator], we are the only people. In Canada, there are two other people, but still with the two competitors what share we can get, we will get that. So but overall business in both places that is Australia and Canada put together will not be a significant amount, it maybe around $5 million or so. Because the market size itself is small in those market. EU and US are the big markets where we are expecting some good [profit] in the next few weeks. Ankit Thakkar: So, totally it would be safe to assume that you are expecting a business of $5 million? Raghavendra Rao: Yes. Maximum, yes. Operator: Thank you. The next follow-up question comes from Ms. Jenny Park from Merrill Lynch. Please go ahead, ma’am. Jenny Park: Hi, what’s your cash balance now, as of quarter end? Raghavendra Rao: $5 million.

- 24 -

Jenny Park: 5 million. And, one question is in the third quarter, I think you mentioned that excluding the foreign currency CB, the debt, the total debt was about 730 crores, which has now increased to 1120 crores. Could you please explain why the debt was increased? Raghavendra Rao: No, I don’t think. There is a 400 crore increase in the last couple of quarter or anything like that. I think that 737 would have excluded the working capital. Because long-term and unsecured loans would have been there because working capital on the nature of working capital and bill discounting, might have been excluded, but otherwise I don’t think that the total loan have change by 400 crore in the last six months. Jenny Park: The total debt as of March ‘07 the last, last… Raghavendra Rao: Yeah. March ’07. Jenny Park: Yeah. I know that about -- again 16 billion rupees where now it’s over 19 million rupees, which I think is an increased even though the company had indicated that it may pay down some debt during the year? Raghavendra Rao: I think compared to March ‘07, last year, we completed all the projects in Carbapenems as well as in penicillin injectables and the non-antibiotics. So the capital expenditure is the main reason for the increase in debt. But March ’07, the total debt was also 780 crores excluding the bill discounting that was about 200. So about 11,000 crores, total 233. So about 1013 crores was the total amount as of March 2007 that has gone up, you are right in terms of increase part of it, but for the full year as a whole. So that year as a whole increases on account of the capital expenditure that we had incurred to complete all the projects that mattered during the penicillin as well as in the non-antibiotics as well as in carbopenems. Jenny Park: Okay. The working capital that is included in your balance sheet, right? Raghavendra Rao: Yeah. Part of the working capital debt is included. Part is mentioned in the most account. That is the packing credit is mentioned, the amount of packing credit in March ‘07 was about 300 crore that has gone up to 420 crores now, 120 crores was increase in working capital borrowing that is the packing credit borrowing, where as the bill discounting was more or less at the same, in fact, there is a small reduction in the bill discounting from 230 crore to 200 crores. Jenny Park: It’s not 250, those discounts?

- 25 -

Raghavendra Rao: Current year bill discounting, yeah, sorry, 250, its 200. So 250 to 233 that’s about 17 crore increase and working capital increased at 120 crore and balance is the long-term increase. But we should also see that, you know our total business growth by about 33% in the year between March ‘07 and March ‘08. So working capital increase to an extent is inline with the business in the sense that the business growth was more than 30%. And the short-term loans increased to about 120 crores. Balanced amount was incurred in the increase in long-term loan went into the fixed asset creation for Carbapenems as well as non-antibiotics and penicillin. Jenny Park: Okay. For the full year March ‘08, were you free cash flow positive? Raghavendra Rao: Mr. Krishnan will answer this, one second. Jenny Park: Okay. S. Krishnan: So there was a decrease in cash and cash equivalents. Jenny Park: So we had expense. S. Krishnan: See, we had an opening cash of about $25 million that was absolutely rebalanced that was outstanding as of 1st, April '07. So that has come down to currently about $5 million, so net cash was negative. Jenny Park: Okay. So what was the closing cash balance… Raghavendra Rao: $5 million. S. Krishnan: $5 million. So there is a $20 million draw down from the opening balance and the operating cash also went into the fixed rates as well as for working capital. So the next closing balance as of March '08 was there on $5 million. Surya Narayan Patra: I have one or two questions, let me ask. Mr. Rao, can you give me some indication about your Japanese initiative?

- 26 -

Raghavendra Rao: Well. See the initiating is in two, three part. One is we are open an office there, we have taken three people CEO and CMO, Chief Marketing Officer as well as the CRO, Chief Regulatory Officer. So they are all experienced people in the pharma space and have led a big corporations in the past. We have also short-listed that is on the organization side and the company side that they are incorporated that. we have also short listed nine products for Japan, most of them are injectables and we are preparing their documentation to make our sub-filing by March ‘09. And once we start filing that, it will take about a year and half for the approvals to come by, so from 2010, ‘11 financial year we should be able to start marketing a few injectable products in the Japanese market. Surya Narayan Patra: Okay. Any update on the research pipeline front, sir? Raghavendra Rao: There is a good pipeline, but once we get fresh ID 1002, which we thought that would reply has not flown. So obviously we are little bit cautious in depth of saying what is happening there. But I can tell you that Dr. Gopal and who was a chief in Glenmark was also responsible for most for the molecular development there including the ones that were licensed by them, has joined as a chief scientific officer about five months ago and he, supported by Dr. Sriram Rajgopal, who is from Dr. Reddy’s Lab has also done lot of work on oncology and other information and other molecule. And the entire scientific team is very, very robust now. And we have a few molecules in the pipeline now in the pre-clinical and early stage of development. So I think, we are working on four fields like asthma, COPD as well as diabetes, and inflammation, and infection and cancer. These are the four therapies that they are working on. Right now we don’t have anything specific to say that the molecule has brought such a milestone. But I think in each of the therapeutic areas we have at least one molecule where the mechanism of action is known and we are progressing in the pre-clinical trials in-house. Depending on the development of this, we will keep you posted as we go forward. Surya Narayan Patra: And last one question is sir, we have indicated something like Para IV opportunities, that is Ibandronic and Memantine and [Gemifloxacin], what is the targetable market size of these products? Raghavendra Rao: It is about $2 billion Surya Narayan Patra: Okay. Sir do we have just three Para IV opportunities in the near-term or what?

- 27 -

Raghavendra Rao: There are more actually. There are two more. We have already filed desloratidine-ODT and IR. They are smaller molecules but nevertheless we have some unique position in depth. So this are the five FTF that which we’ve already filed. But we have in the pipeline another five, we cannot name them right now as soon as we file them it will come into public domain and then we will be able to inform you. But the five we have filed, and got accumulate have got a present sales of $2 billion and the five that we are going to to file in the next six or seven months, that also has approximately $4 billion of present market value. So these ten products of 10, 11 Para IV FTF are the one which are going to drive the business two year or two and the half years from now. Right now, we are actually sowing the seeds for it without any revenue calculation is coming in obviously. But we are very confident that you know in two and half years, we will be in a very good position on some of those. Surya Narayan Patra: Okay. Thank you, sir. Sachin, do you have any other participants? Operator: No, sir. Surya Narayan Patra: Okay. That is all from our side, sir. Raghavendra Rao: Okay. Surya Narayan Patra: And thanks all to the participant for making this conf call successful. And our special thanks to the entire management of Orchid Chemicals and Pharmaceutical for spending there valuable time with us. Thank you all. Raghavendra Rao: Okay. Thank you. S. Krishnan: Thank you. Operator: That does conclude a conference for today. Thank you for participating. You may all disconnect now. Thank you. END